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Longer, analytical article.  When bogus firms wired back Sh1bn

Summary & Comment: Fictitious companies associated with a wealthy Kenyan family refunded Sh990 million to the Government in 2004 in relation to secret Anglo Leasing-type contracts, investigations show.

Author: Nation Team Date Written: 24 January 2006
Primary Category: Kenya Document Origin: Daily Nation
Secondary Category: Eastern Region Source URL: http://www.nationonline.com
Key Words: keny, Anglo Leasing, corruption

Printable Version
When bogus firms wired back Sh1bn

Fictitious companies associated with a wealthy Kenyan family refunded Sh990 million to the Government in 2004 in relation to secret Anglo Leasing-type contracts, investigations show. And the money was paid back only after a Cabinet minister ordered then acting Treasury permanent secretary, Joseph Oyula, "to pick up the phone and call Deepak Kamani," the minister is reported to have admitted to former Ethics permanent secretary John Githongo at a June 14, 2004 meeting. The source of the mysterious refund, which the Kibaki government consistently refused to reveal when the Anglo Leasing scandal broke in 2004, is exposed today for the first time following long term investigations by the Nation . 

The people identified mirror the content of a 31-page dossier submitted last month to President Kibaki and the director of the anti-corruption authority, Mr Justice Aaron Ringera. Investigations also reveal that the Government did not disclose the full amount refunded to the Treasury that year – it told the public of Sh821 million, but records show that the amount received back exceeded Sh1 billion.

Phantom company

The phantom company, which sent the money back, is associated with Mr Chamanlal Kamani, 74, and his two sons Rashmi Kamani and Deepak Kamani, who are wealthy businessmen with investments in Kenya, the UK, India and Dubai. Despite public pressure, Finance minister David Mwiraria, then Internal Security minister, Chris Murungaru, and Head of Civil Service, Francis Muthaura, all refused at various times to name the person behind the company, which had refunded the money. Mr Mwiraria, for instance, pleaded in a newspaper interview that he could not name the main players because the Treasury only knew those who had signed the contract forms for the passports and CID forensic laboratory deals.

On July 9, Dr Alfred Mutua, speaking for the Government, announced that Sh821 million had been returned by Anglo Leasing – not naming the people behind it – after "a lot of pressure" by the Government and an investigation in which 70 people had been interviewed. "We have not yet identified who returned it or from whose accounts it was sent," said Dr Mutua. 

The Nation has now established that the actual amount returned was Sh990,954,744, based on the Central Bank exchange rate on the day the announcement was made. This does not include a cheque for $910,000 (Sh72,618,000) based on the exchange rate at that time) which was mysteriously handed over to the Office of the President by an unidentified firm of lawyers. The money was a refund from Silverson Establishment, allegedly of Liechtenstein, which had been contracted to supply the Office of the President with vehicles in 2001. The company also had a mailing address at Sheraton House, Cambridge.

Investigations also point to the likelihood that Anglo Leasing had an informer or informers in senior government cadres leaking information and prompting it to repay money whenever there was pressure from anti-corruption investigators. These would have been the same people who cleared the way for the contracts and rushed through their multi-million shilling payments even before work was done. The minister's admission to Mr Githongo, contained in a secret dossier prepared by Mr Githongo and sent to President Kibaki in November last year, is the first piece about the real faces behind the Anglo Leasing projects. It is also proof that senior people in government knew more about the projects, and the people behind them, than they informed anti-corruption investigators and the public. 

Anti-corruption detectives had asked Interpol to help in tracking down Mr Kamani and Dr Merlyn Kettering, a US citizen, who acted as consultant for Anglo Leasing in many of its controversial projects. Mr Kamani was questioned for only two hours by the Kenya Anti-Corruption Commission on May 24, nearly a month after he returned from Dubai, where his family has businesses. Detectives had been unsuccessful in questioning him since May 10, being told that he was "unavailable" and he agreed to present himself only after assurances that he would not be arrested. 

Nation investigations have traced the trail of the full amount of money refunded by Anglo Leasing and similar companies, which the Government did not fully make public. Anglo Leasing made the first repayment of Euro 956,700 through a telegraphic transfer from Schroeder & Co Bank AG, Switzerland on May 17, 2004. This was the dubious "administration" "commitment" and "arrangement" fee paid upfront for the passports project. In that contract, Anglo Leasing had identified itself as a UK company with an address in Liverpool, where it could not be found. The next payment was in June 7, 2004, and the amount of $4.7 million was wired back. The payment was a refund against the money paid for the Criminal Investigations Department forensic laboratory. 

The biggest payback, Euro 5.2 million, was in respect of the E-cop project, which involved computerisation of the police force and the installation of spy cameras in Nairobi by Infotalent Systems Private Limited. In the contract with the Government, Infotalent claimed to be a Swiss company based at 10 Square du Vieux Chene, 1224, Geneva, Switzerland. The company is not registered in Switzerland, and its address does not exist in Geneva. Infotalent Systems Private Ltd, according to documents obtained from the Securities and Exchange Board of India, is owned by the Kamani family and acted with the Kamanis in the acquisition of shares in an Indian finance company, Rajath Finance Ltd (formerly Rajath Leasing and Finance Ltd) in 2003.

In the other two projects, Anglo Leasing gave addresses where businesses in which members of the extended Kamani family had an interest were either based or had been located. Nation inquiries reveal a pattern which suggests that the principals of Anglo Leasing were keeping tabs on what was happening in the Government through high-level contacts, particularly in the anti-corruption investigation, and responding in an effort to limit exposure. On May 14, 2004, a State House corruption briefing was conducted in which the final investigations report on the passports project was presented, according to those who have seen the dossier prepared by Mr Githongo. 

For the first time, it was revealed at the briefing that an even more suspicious contract was in the works involving a police laboratory. Two hours after the briefing, the head of Public Service, Francis Muthaura, called Mr Githongo to inform him that Anglo Leasing had been in touch with his office and agreed to repay all the money paid to it for the passports equipment, according to those who have seen the Githongo dossier. 

The briefing, on a comprehensive investigation by KACC, led to authority being granted two days later to suspend former Treasury permanent secretary Joseph Magari, former Home Affairs PS, Sylvester Mwaliko, the director of the government information technology service, Mr Sitonik, and Ms Dorcas Achapa, an official from the Attorney-General’s office. On June 4, having established that Mr Githongo wrote to Mr Muthaura to let him know that investigations had established that Anglo Leasing and forensic labs were fictitious companies, he asked the Central Bank of Kenya not to pay any more money to the company. 

There was also publicity on the suspect projects after acting Treasury PS, Joseph Oyula, gave unsatisfactory testimony to the Public Accounts Committee during which he claimed that some of the Anglo Leasing payments were a "mistake". He is reported to have got angry when pressed for the identity of the people who had represented Anglo Leasing in its dealings with the Government. This was compounded by media reports that the Government in the Budget presented on June 10, had set aside Sh222.5 million to be paid to Anglo Leasing – despite the revelations that the firm and its contracts were highly suspicious. 

Lawyer arrested

On June 11, 2004, leading lawyer, Fred Ojiambo, was arrested in a highly publicised operation by anti-corruption police. They wanted him to tell them who had instructed him to put an advertisement in the papers on behalf of an Anglo Leasing-linked company. According to people privy to the secret dossier, Mr Githongo is quoted as saying that the arrest caused widespread panic in government. Energy minister, Kiraitu Murungi, called him to say that the then Security minister, Chris Murungaru, who was travelling in the UK, had called to find out what was happening. Mr Githongo is reported to have written in the dossier that it was feared in the higher echelons of government, that the arrest of Mr Ojiambo could precipitate revelations resulting in the collapse of the Government. 

That day, Finance minister David Mwiraria informed Mr Githongo that Anglo Leasing had agreed to repay all money given to it for the police laboratories since 2001, Mr Githongo is reported to have written. The money had been paid out as follows: $900,000, $1.9 million and $1.92 million. The total paid for the labs was $4.744 million. Two days later, Mr Githongo is reported to have received information, later confirmed by the Central Bank, that Infotalent had repaid Euro 5.2 million which it had got for the E-cops project. A total of Sh971 million had been repaid by companies which investigations showed to have a link to the Kamani family. 

Printable Version

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